Why value co-creation?

In this post I want to elaborate a point I made in the end of my previous “Going beyond ‘producers’ and ‘consumers’” post about the co-created nature of value. Why does service-dominant (S-D) logic talk about value co-creation and not about value creation?

In the traditional company-centric notion of value and value creation, value is measured by monetary terms and is something that companies create through production [1]. In this logic value is seen as something that can be embedded into company outputs such as products to make them desirable by the customers. The customers must purchase the products in order to consume the value (hence value is ‘destroyed’ while products are used).

Value creation1

S-D logic abandons the conventional logic and instead, introduces the notion of value-in-context [2], in which the customer becomes an active participant into the process of value creation. Value-in-context eliminates the company’s sole right for value creation by arguing that value actually emerges in the context of the customer when the provided service (applied resources) is integrated with other resources to achieve a wanted outcome. Hence, value is always uniquely perceived by a service beneficiary and it unfolds over time. For example this text has no value on its own when it just exists in our blog. It only becomes valuable when you read it and (if) my thoughts are connected with yours.

Based on this some have actually come to the conclusion that it is only the customer who should be called as a value creator, while the company is left with the role of a value facilitator [3].

Value co-creation2

This argument is, however, missing a crucial point. Service-for-service exchange is always reciprocal by nature meaning that both the customer and the company are simultaneously service providers and service beneficiaries. In other words, both customers and companies can be seen as resource integrating actors engaged in service provision and value co-creation both for themselves and others [2]. This actor-to-actor (A2A) perspective is fundamental to the S-D logic worldview. It is also critical, if we really want to understand the complexity of the world (and business).

Value co-creation3

Thus, S-D logic further broadens our view on value co-creation by arguing that service-for-service exchange does not occur in dyadic relationships (between two actors), but in larger ecosystems of value co-creating actors [4]. This means that when trying to achieve a certain outcome you never integrate resource from only one source (e.g. one company). Instead, a huge number of actors, scattered over time and space, are participating in the joint process of value co-creation.

Value co-creation4

If the idea of value co-creation has not convinced you yet – think of this very moment. In order for you to be able to read my blog post, you need to have a laptop or some other device equipped with an internet connection, some way of finding my text (e.g. Google) and the ability to read (just to name a few things). Can you imagine how many people’s effort has been needed to make this moment of (potential) value co-creation possible? I can’t. The greatest strength of human kind is to be able to collaborate in ways that well exceeds the understanding of a single individual.

References:

[1] Vargo, S.L. & Lusch, R.F. (2004) Evolving to a new dominant logic for marketing. Journal of Marketing, 68 (January), 1-17.

[2] Chandler, J.D. & Vargo, S.L. (2011) Contextualization: Network Intersections, Value-in-Context, and the Co-Creation of Markets, Marketing Theory, 11(1), 35-49.

[3] Grönroos, C. (2011) Value co-creation in service logic: A critical analysis. Marketing Theory, 11(3), 279-301.

[4] Vargo, S.L. & Lusch, R.F. (2011) It’s all B2B…and beyond: Toward a systems perspective of the market. Industrial Marketing Management 40, 181-187.

5 thoughts on “Why value co-creation?

  1. Pingback: Value co-creation in the packaging industry | It's all about Service. Logic.

  2. Pingback: And the journey continues… | Service Science Odyssey

  3. Pingback: Module 4 – Resource integration in the IT-consulting industry | lukaspmssl152wordpresscom

  4. Pingback: Resource integration in the library landscape | Done in a second

  5. Pingback: Resource integration | understandingsite

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